Privatisation 'failed' railways

Rail privatisation has led to the UK having the most expensive fares in Europe, older trains and serious overcrowding, and train operating companies entirely reliant on public subsidies, according to a new report commissioned by the TUC.

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The franchising system allows privately-owned train operating companied to distribute profits at a low cost from public subsidy, the director of the Centre for Research on Social-Cultural Change (CRESC) said today.

Research reveals rail privatisation has led to the UK having the most expensive fares in Europe. Credit: PA

Professor Karel Williams responded to a new report which claimed that rail privatisation in the UK was "failing to deliver".

She said: "The privately-owned train operating companies have hijacked the government's rail reform agenda which is all about 'getting franchising back on track'.

"It would make sense to abolish the train operating companies and it would cost the taxpayer nothing if it were done as the franchises expired."

The Department for Transport has rejected a TUC report, which claimed that privatisation failed to deliver for rail users and taxpayers and had brought in little private sector investment. A spokesman said:

We do not accept the TUC's analysis of the rail industry.

The fact is privatisation works. It has transformed an industry that was in decline into one that is providing record numbers of journeys for record numbers of passengers and is one of the safest in Europe.

We are currently embarking on the biggest programmes of rail investment ever with work beginning to electrify much of the network, the procurement of over 2,000 new carriages and the upgrade of stations across the network.

This has only been made possible by successive governments working closely with an innovative private sector.

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Rail privatisation has failed to deliver for rail users and taxpayers, according to a new TUC commissioned report published today. The report said that privatisation has brought in little private sector investment. The figures show:

The average age of trains has risen since rail privatisation, from 16 years in 1996 to 18 years old today. Just £1.9bn was spent on rolling stock between 2008 and 2012, compared to £3.2bn between 1989 and 1993.

Over 90% of new investment in recent years has been financed by Network Rail.

The UK has the most expensive rail fares in Europe. Long distance, day return and season tickets are all around twice the price of similar tickets in France, Germany, Italy and Spain, which have publicly-run rail systems.

Average train fares in the UK increased at three times the rate of average wages between 2008 and 2012.

Privatisation has proved to be a bad deal for taxpayers, the general secretary of a train drivers' union said today, after a study found that rail privatisation has led to the UK having the most expensive fares in Europe. Mike Whelan of Aslef said:

In the face of soaring fares, more overcrowded trains, much bigger taxpayer subsidies and rising dividends being shipped offshore by the privatised rail companies, we think it is time to bring Britain's railways back into public ownership.

TUC policy officer Matt Dykes said that the country was made a "great deal of promises" at the time of rail privatisation.

Speaking to Daybreak he said: "What we're finding is on average, trains are older, there's overcrowding, we're paying the highest the fares in Europe."

He added: "The most important point, I think, is that the whole industry still relies on billions of pounds of taxpayers subsidy, much if which ends up being passed onto the share holders of the train operating companies, rather than being invested into the service."

Edward Welsh from the Association of Train Operating Companies has told Daybreak that the TUC is being "naughty" in claiming that rail privatisation has led to the UK having the most expensive fares in Europe.

He said: "We have a choice of different fairs, it's like airline discounting, you are able to buy cheaper fares if you book in advance or use a rail card and often on the continent you don't have those kind of benefits."

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Britain's railway has been transformed in the last 15 years, thanks to the public and private sectors working successfully together to deliver for passengers and taxpayers.

By introducing competition between train companies to run services, government has ensured operators have played a crucial role in reversing the fortunes of the railway by motivating them to attract more passengers.

Significant investment plus an industry focused on encouraging rail travel are generating record levels of revenue to pay for more trains, faster services and better stations.

A TUC report - The Great Train Robbery - concludes that rail privatisation has "failed to deliver", with UK passengers paying expensive fares for older trains.

This study explodes the myth that rail firms are bringing added value to our railways. In reality they rely upon taxpayers to turn a profit, virtually all of which ends up in shareholders' pockets, rather than being used to improve services...

The Government must accept that the current model is broken. Its determination to impose franchising across the network - even on the East Coast Mainline which is performing well as a nationalised service - shows ministers are ignoring the evidence of 20 years of failure.

A TUC report found long distance, day return and season rail tickets are around twice the price of similar tickets in France, Germany, Italy and Spain, which have publicly-run rail systems, while average train fares in the UK increased at three times the rate of average wages between 2008 and 2012.

The report dismissed claims that privatisation had helped increase the number of people travelling on the railways, maintaining that passenger growth has mostly been down to rising economic output and changes in employment patterns rather than because of privatisation.

Rail privatisation has led to the UK having the most expensive fares in Europe, older trains and serious overcrowding, and train operating companies entirely reliant on public subsidies, according to a new study.

The TUC said privatisation had failed to deliver for rail users and taxpayers and had brought in little private sector investment.

Its report - 'The Great Train Robbery' - showed that private train companies were heavily dependent on the public purse to enable them to run services, and re-invested little of their profits back into the railways.

Firms receiving the largest state subsidies spent, on average, over 90 percent of their profits on shareholder dividends, according to the study carried out by the Centre for Research on Social-Cultural Change (CRESC) at the University of Manchester.

Train companies made operating profits between 2007 and 2011 of £504 million, most of which was paid to shareholders, said the report.

Meanwhile the average age of trains has risen from 16 years in 1996 to 18 years old today. Just £1.9billion was spent on rolling stock between 2008 and 2012, compared to £3.2 billion between 1989 and 1993.